Egypt

China has entered the final week for the selection and packaging of late-season oranges. The 2017 orange production season has come to an end. At the same time, US oranges, Egyptian oranges, and Spanish oranges are all entering the final stage of their production seasons. The overall condition of the Chinese orange market during the last production season was depressed. The market condition was similarly disastrous for imported Egyptian oranges. Most importers suffered losses from the beginning of the production season until the very end. Only the quality of late-season Spanish oranges was relatively good and had some potential for profit.

Australia and South Africa have begun to select and package oranges for the upcoming, scorching hot Chinese summer. Mr. Xie Jinshan, CEO of the Shenzhen GoldAnda Agricultural Technology Development Co., Ltd. (hereafter GoldAnda) recently visited Nippys farms in Australia and the Gogo farms in South Africa. He stated that Australian orange production has slightly decreased this year, but the fruit size is slightly larger than last year. A larger share of the production volume meets the requirement for export to China. The taste and sweetness is also better than last year.

The production volume of South African oranges increased, but the fruit size is slightly smaller than last year. The area recently suffered from hail and other extreme weather conditions, but this only had limited influence on the overall production volume.

GoldAnda is a global leader in orange retail. They annually sell more than 1000 shipping containers full of oranges. GoldAnda has developed a strong cooperation with Australian Nippys in recent years. Together they have worked hard to make Nippys the number one Australian orange brand in China. At the same time, GoldAnda developed a good working relation with high-end South African brand Gogo. Their import volume has increased by 30%. Australian and South African oranges are already underway to Chinese ports and will soon arrive.

One of the world’s leading premium orange growing regions has been formally granted pest free status by the Chinese Government, raising hopes of continued growth of South Australian citrus exports to Asia.

South Australia is the only mainland Australian state that is free of fruit flies. Its Riverland region is renowned for producing some of the world’s highest quality table oranges.

The Chinese recognition follows on from Indonesian recognition of the Riverland as a Pest Free Area (PFA) in December 2016 and China’s recognition of the Riverland in May last year for the export of nectarines.

Other export markets recognizing the Riverland PFA include the United States, Thailand, Japan and New Zealand.

The Chinese Government had previously required all Australian oranges to undergo rigorous temperature and loading protocols, which added about AUD$200 (US$153) per metric ton (MT) to export costs.

The changes come at an opportune time when Australian citrus exports to China are increasing and are set to reach a record of 85,000MT in 2017.

Located along the Murray River about 250km (155mi) east of the South Australian capital Adelaide, the Riverland is the third largest citrus growing region in Australia, with a high proportion of Navel oranges.

Impi Citrus exports more than 1,000MT of navel oranges from its Riverland packing plant in Renmark to Asia each year with Japan as its largest international market.

Previously the company’s orders for China had to be sent to a specialist facility in Victoria to be chilled before being loaded into a container where the oranges needed to be kept at 3°C (37.4°F) for 21 days, adding about $5,000 (US$3,826) to the cost per 25MT container. The new certification will also cut shipping time to about 14 days.

Impi Citrus marketing manager Ben Cant said the pest free certification was a massive win for Riverland exporters and gave them a competitive price and timing edge over Australian producers in other regions.

“Potentially it means that the stock we land in China will be a week younger and it also means we are able to react to the market with a lot more flexibility because we’re not chilling fruit down,” Cant said.

“The Japanese and Chinese are very quality focused and they have continued to recognize the quality of Australian citrus so we think it’s going to increase our ability to ship to China

“We think it will make the market a bit more stable but we’re excited all round because Japan still has room for growth and China has room for significant growth.”

In 2016, Australia was the world’s eighth largest orange exporter behind Spain, the United States, South Africa, Egypt, the Netherlands (re-exports), Greece and Turkey. South Australia alone exported AUD$102 million (US$78 million) worth of citrus in 2015-16, up from AUD$71 million (US$54.3 million) in 2014-15.

“Australia is regarded as having the best citrus in the world because of its climate and the Riverland is regarded as the best region in Australia particularly for table oranges,” Cant said.

“The export demand is so strong that it has underpinned domestic pricing and our returns have been very good.

“Citrus is very buoyant financially at the moment – there’s a lot of investment going on to increase production to meet export demand.”

South Australian Agriculture, Food and Fisheries Minister Leon Bignell said the announcement that China had agreed to amend its import conditions for Riverland citrus was the result of several years of negotiations.

“This is outstanding news for the Riverland and will be instrumental in opening up further export opportunities for the region,” he said.

“It’s fantastic to see years of diplomatic negotiations come to fruition with all produce from the Riverland now recognized as pest free.

“This announcement will further reinforce our reputation in the international arena and I look forward to building an even stronger relationship between South Australia and China.”

The Riverland is also Australia’s largest wine grape producing region, accounting for about 25% of the nation’s annual production.

The first Egyptian lemons of the season arrived in the Perth market on Wednesday 8 November. Graham Morgan, from Bullfrog International, had the lemons and said the quality of the fruit was very good.

“The lemons are a good colour and clean, a big improvement on last year.”

Egyptian citrus imports grew exponentially last year, however lemon volumes were not large because the Egyptian lemons were too green for the Australian market.

This year, BGP International, the Australian company responsible for the first imports, took a hands on approach to ensure Egyptian lemons would satisfy the Australian consumer’s requirements.

Allen and Sue Jenkin from Ironbark Citrus in Queensland, travelled to Egypt on behalf of BGP, to share their expertise on de-greening citrus with the Egyptian packers who work in partnership with BGP.

“As a result of the information sharing trip by Allen and Sue, and the enthusiastic response they received from our Egyptian partners, we can see a fabulous outcome with the first lemon arrivals”, said Neil Barker, Managing Director of BGP. “We are planning a strong increase in our lemon imports from Egypt based on these improvements”.

“In addition to our Australian program we are now shipping the better coloured and graded lemons to China and achieving great results” he added.

Australian consumers will enjoy Egyptian lemons through until the start of the local season in February.

The Egyptian citrus sector has grown in recent years. Thanks to the decrease in value of the Egyptian Pound, exports saw the price of this citrus become more attractive in the world market. In addition, the acreage has increased and there are more orchards. This has resulted in an increase in the available volumes. Finally, Egypt has profited greatly from the two Russian boycotts in 2014 and 2016. This is according to a USDA report.

Egypt ranks in sixth place as the world largest orange producer. Of the Egyptian production, 46% is sold domestically, 51% is destined for export and the remaining three percent is processed. Brazil, the forerunner in world production, supplies 72% to the industry.

Growing demand is stimulating expansionFAS Cairo estimates that the planted acreage grew by five percent to 154 200 hectares in 2017/2018. A year earlier, this was 146 950 hectares. Of the 154 200 hectares of oranges, 142 100 hectares is harvested. This is an increase of four percent compared to the previous year when it was 136 475 hectares. This has resulted in increased production. Next year will see an estimated production of 3,18 million tonnes. This is an increase of six percent as compared to production a year earlier. This increase is thanks to this year's favourable weather conditions. These stable weather conditions are expected to continue into next year. An added positive factor is the increasing demand for oranges in Egypt, as well as abroad. This is bolstering production.

This growing demand for oranges stimulates growers to expand their acreage. This is clearly evident in the acreage figures. In 2006/2007 there were 104 383 hectares of oranges in Egypt. For 2016/2017, this number stands at 146 950 hectares. This is an increase of 42 567 hectares, which is 41%. Taking these same factors into account, it can be said that citrus farmers prefer growing oranges. Thanks to a well-developed supply chain in the country, smaller growers can sell their product via exporters or larger growers. In this manner, the smaller farmers also benefit from the growing global demand.

Mediterranean fruit flyThe majority of growers are located in the Qalyoubia, Beheira, Sharqiya, Ismailia and Menufia regions. Cultivation, of course, takes place on the banks of the Nile. Citrus farming is dependent on irrigation. The Nile, it's fertile banks and the large amount of sunlight are a good combination for citrus cultivation. In addition, growers benefit from low labour costs and a relative proximity to the largest export markets.

The biggest threat to cultivation is the Mediterranean fruit fly. This negatively impacts not only production but exports as well. Although there are increased exports, there have been reports from various countries, such as Russia and the Ukraine, regarding fruit fly infections. The Egyptian government is working on improving the quality of its fruit and vegetables. A new food safety system has, therefore, been established. The size and quality of export oranges have to be registered here.

Increased demand for orangesFor every ten oranges harvest, six are Navels. Other varieties that are cultivated are the Baladi, Khalily and Sukkari. These are mostly destined for the domestic market. A well-known export variety is the Valencia. Harvest time is usually four to five months. In total, there is an almost year-round supply of Egyptian oranges. The only exception is the hot summer months of August and September. The export season begins in mid-November and, thanks to cold storage, it runs through to the end of August.

The international, as well as domestic, demand for Egyptian oranges has risen sharply. Local prices are more profitable than prices for other types of fruit grown in this North African country. It is estimated that local consumption will rise by seven percent in 2017/2018, reaching 1,48 million tonnes. The domestic demand is especially high during the winter months.

Weakening Egyptian PoundThe efforts of the sector and the government to open up new markets, combined with the devaluation of the Egyptian Pound, has resulted in increased demand in the world market. This year countries like Australia and Vietnam were added to the list of export markets. These countries have opened their borders to Egyptian citrus.

In November, the Egyptian government released its fixed exchange rate and left it to the market to determine it's currency's value. Initially, the currency's value fell in relation to the US Dollar, but this decline has since slowed. As a result of the Egyptian Pounds decrease in value, inflation rose and citrus became more expensive. The weakened exchange rate was, however, good for the export market. In the 2017/2018 market year, exports will increase by five percent, reaching 1,6 million tonnes. A year earlier, this was still 1,52 million tonnes. Orange farmers are benefiting from the lower exchange rate. It gives Egyptian citrus more of a competitive edge over Spanish and Moroccan citrus.

Growing export marketThe largest export markets in 2016/2017 were Russia Saudi Arabia, the Netherlands, China, the UAE, Bangladesh, the UK, Kuwait, Iraq and the Ukraine. Russia and Saudi Arabia, together, accounted for 43% of the orange exports. No major changes are expected in these export markets. Large growth figures are noted with some of these export markets. Exports to China increased by 204% to 99 930 tonnes. Hong Kong received 123% more Egyptian oranges, reaching a total volume of 44 228 tonnes. Other markets that import a considerable amount more of Egyptian oranges are Iraq(30 252 tonnes, +1 314%), Turkey (26 026 tonnes, +932%) and Italy (19 205 tonnes, +222%).

Egypt is also benefiting from the two Russian boycotts announced in recent years. The 2014 blockade of European product, as well as the 2016 ban on Turkish fruit and vegetables, have had a positive influence on this Egyptian sector. It has filled the gap left by Greece, Italy and Turkey. With 217 988 tonnes, Egypt is Russia's largest citrus supplier. In 2013, the US opened its border to Egyptian citrus, but training exporters in the required cold treatment procedures has not yet started.

“This project has been funded by the Australian Trade Commission as a part of the Asian Business Engagement (ABE) grant program and is supported by Trade and Investment Queensland and the Department of Agriculture and Fisheries Queensland.”